THIRD AMENDMENT TO FINANCING AGREEMENT
THIS AGREEMENT, dated as of September 7, 1994, is entered into by and
between TAMMAC FINANCIAL CORP., a Delaware Corporation, with its principal
office located at 100 Commerce Boulevard, Wilkes-Barre, Pennsylvania 18702
(hereinafter referred to as "Tammac") and LOS ABRIGADOS PARTNERS LIMITED
PARTNERSHIP (a/k/a Los Abrigados Limited Partners Limited Partnership), an
Arizona Limited Partnership, with its principal office located at 2777 East
Camelback Road, Phoenix, Arizona 85016 ("Developer") and ILX INCORPORATED (f/k/a
International Leisure Enterprises Incorporated), an Arizona Corporation, with
its principal office located at 2777 East Camelback Road, Phoenix, Arizona 85016
("Guarantor").
R E C I T A L S:
A. The Developer and Tammac entered into a Financing Agreement dated as
of September 10, 1991 (the "Financing Agreement" or the "Agreement"), which set
forth the terms and conditions regarding the Developer's sale and Tammac's
purchase of certain consumer installment obligations generated at that certain
timeshare condominium project known as Los Abrigados Resort, Sedona Vacation
Club, located at 160 Portal Lane, Sedona, Coconino County, Arizona (the
"Project").
B. The obligations due and owing to Tammac under the Financing
Agreement are secured, in part, by the liens and security interests granted by
Developer pursuant to a Security Agreement and a Deed of Trust, Assignment of
Rents and Security Agreement (the "Mortgage"), of even date with the Financing
Agreement.
C. Contemporaneously with the execution and delivery of the Financing
Agreement, the Guarantor executed and delivered a Continuing Guaranty Agreement
in favor of Tammac.
D. Tammac and the Developer entered into a Modification Agreement dated
as of August 12, 1992, modifying certain terms and conditions of the Financing
Agreement (the "First Modification Agreement").
E. Tammac and the Developer again amended and modified the Financing
Agreement as evidenced by that certain Amendment to Commitment Letter, Financing
Agreement, and Reaffirmation of Various Loan Documents dated as of March 31,
1993 (the "Second Modification Agreement").
F. Pursuant to the terms of that certain Commitment Letter issued to
International Leisure Enterprises Incorporated dated June 28, 1991, the rights
and obligations of which were assigned by International Leisure Enterprises
Incorporated to the Developer, and as said Commitment Letter was amended and
modified by the First Modification Agreement and the Second Modification
Agreement, Tammac's obligations to purchase Contracts expires on September 30,
1994.
G. Developer has requested that Tammac extend the term of the
Commitment Letter for an additional twenty-four (24) months and purchase up to
an additional $10,000,000.00 of new Contracts to be generated by the Developer
at the Project. Pursuant to that request, Tammac issued to Developer a
Commitment Letter dated July 20, 1994. (The aforesaid Commitment Letter dated
June 28, 1991, as amended and modified by the First Modification Agreement and
the Second Modification Agreement, and the Commitment Letter dated July 20, 1994
are hereinafter sometimes collectively referred to as the "Commitment Letter.")
H. The parties desire to amend the terms and conditions of the
Financing Agreement and to affirm certain terms and conditions of the various
loan documents executed in connection therewith.
I. To that end, the parties wish to memorialize their agreements by
this writing.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
Definitions: Unless otherwise defined herein, all capitalized or
defined terms used herein shall have the same meaning set forth in the
Commitment Letter, the Financing Agreement, the Modification Agreement,
the Second Modification Agreement, the Deed of Trust, the Security
Agreement and all related Loan Documents.
Recitals: The recitals set forth above are hereby incorporated herein
as if set forth at length. Tammac, the Developer and Guarantor each,
jointly and severally, acknowledge and confirm that all of the
aforesaid recitals are true, accurate and correct in all respects.
Modification of Financing Agreement. Effective as of the date of this
Third Amendment to the Financing Agreement, the Financing Agreement is
amended and modified as follows:
(a) Section 1.4 is hereby amended in its entirety to read as
follows:
1.4. "Guarantor" or "Guarantors" shall mean any one or all of the
following (as the context so requires) who have executed and
delivered guaranty agreements ("Guaranty Agreements") in favor
of Tammac, or any additional guarantors who may have or may in
the future unconditionally guaranty the obligations of the
Developer hereunder: ILX Incorporated (f/k/a International
Leisure Enterprises Incorporated), an Arizona Corporation.
(b) Section 2.1 is hereby amended in its entirety to read as
follows:
2.1. Subject to the funding limitations for Phase I and Phase II,
as set forth in the Commitment Letter, Developer shall offer
to sell to Tammac the Transactions. Developer shall submit
completed Credit Packages to Tammac for review relating to
said Transactions so offered. Provided Developer is not in
default under the terms and conditions of this Financing
Agreement and the Guarantor is not in default pursuant to the
terms of the Guaranty Agreement, and subject to the terms,
conditions and limitations of the Commitment Letter, as same
may be amended, which Commitment Letter, together with any
amendments, is incorporated herein by reference as though set
forth fully at length, Tammac shall purchase those
Transactions which meet Tammac's lending criteria and
guidelines, as same shall be in effect on the date that the
Third Amendment to the Financing Agreement is executed and
delivered to Tammac by the Developer and Guarantor. A copy of
Tammac's current lending guidelines and criteria is attached
hereto and made a part hereof and labelled as Exhibit "C".
Tammac's lending guidelines and criteria shall not change
during the term of the Financing Agreement. Tammac shall
advise Developer in writing whether it intends to purchase a
particular Transaction. Any approval to purchase a Transaction
shall be subject to the terms and conditions contained in said
approval.
(c) Section 2.2 is hereby amended in its entirety to read as
follows:
2.2 Except as set forth in Section 2.8 of this Financing
Agreement, Tammac shall accept Contracts that meet Tammac's
lending guidelines and criteria and which are written at a
contract rate of five and one-quarter (5 1/4%) percentage
points above the highest prime rate as announced from time to
time in The Wall Street Journal (the "Acceptable Contract
Rate"). The Acceptable Contract Rate shall be fixed for a
period of six months from the execution and delivery of this
Third Amendment to the Financing Agreement and shall be based
on the highest prime rate as announced in The Wall Street
Journal on the business day preceding the execution and
delivery of this Third Amendment to the Financing Agreement
("Prime Rate"). Thereafter, the Acceptable Contract Rate is
subject to change every six (6) months following the execution
and delivery of this Third Amendment to the Financing
Agreement (the "Change Date") and will be reset, if at all,
based upon the Prime Rate then in effect on each Change Date.
Notwithstanding anything contained herein to the contrary, in
the event that the Prime Rate exceeds nine and three quarters
(9.75%) percent per annum, and provided the Developer is not
in default under the terms of the Financing Agreement, Tammac
shall continue to purchase Contracts pursuant to the terms
hereof, irrespective of the interest rate set forth in said
Contracts without discounting said Contracts. For so long as
the Prime Rate exceeds 9.75% Tammac shall have no further
obligation to make Interest Rate Differential Payments to the
Developer, as provided in Section 2.8 of this Financing
Agreement.
(d) Section 2.8 is hereby amended in its entirety to read as
follows:
2.8. Notwithstanding anything contained herein to the contrary, for
each Contract written by Developer and purchased by Tammac at
a Contract interest rate less than the Acceptable Contract
Rate, then in effect on the date Tammac purchases said
Contract, said Contract shall be discounted on the date each
such Contract is purchased by Tammac so as to yield an
equivalent rate to Tammac of the Acceptable Contract Rate then
in effect. To that extent, the amount to be funded by Tammac
to Developer on each such Contract shall be reduced. Any and
all sums paid by Developer to Tammac so as to equalize the
yield as aforesaid shall be non-refundable under any and all
circumstances.
In the event that a Contract written by Developer and
purchased by Tammac provides for a contract interest rate
greater than the Acceptable Contract Rate then in effect on
the date each payment is received under the Contract by the
Consumer, Tammac shall pay to the Developer, as and when
collected and earned, on a monthly basis, the Interest Rate
Differential, as hereinafter defined. The Interest Rate
Differential shall be computed by subtracting the interest
component of each payment of an effected Contract computed at
the Acceptable Contract Rate then in effect from the interest
component of each payment actually received by Tammac on each
Contract written at a rate of interest in excess of the
Acceptable Contract Rate. Tammac shall furnish such
documentation to the Developer, on a monthly basis,
identifying each of the Contracts purchased by Tammac which
are subject to an interest rate differential payment
("Interest Rate Differential Payment(s)") as hereinabove
provided, which documentation shall be reasonably satisfactory
to Tammac and the Developer. Tammac shall not be responsible
to make any Interest Rate Differential Payments to the
Developer unless and until Tammac receives good, collected
funds required to be paid under said Contracts. Developer
recognizes and agrees that it shall bear any credit risk in
the event that all or any payments due under a particular
Contract are not made and/or received by Tammac or are
otherwise dishonored. In the event that all or any portion of
the Interest Rate Differential Payments are required to be
returned to a Consumer or someone making a claim by or on
behalf of the Consumer or the Consumer's creditor(s), the
Developer shall, upon the demand of Tammac, immediately return
all or any portion of the Interest Rate Differential
Payment(s) required to be returned.
Tammac shall be under no obligation to make Interest Rate
Differential Payments to the Developer in connection with the
Acceptable Contracts securing the Loan referred to in the
Commitment Letter.
(e) Section 2.10 is hereby amended in its entirety to read as
follows:
2.10 In the event the Developer sells one Unit Week to two (2)
Consumers, whereby one of the Consumers is purchasing the odd
years of a Unit Week and the other consumer is purchasing the
even years of that Unit Week ("Split Week Contracts"), Tammac
shall not be obligated to purchase any Split Week Contracts
unless said Split Week Contracts meet Tammac's lending
criteria and guidelines.
(f) There is hereby added a new Section 2.11 as follows:
2.11 Tammac shall only accept Contracts which provide that: (i) the
amount financed is an amount equal to or greater than
$7,001.00 and the term of which is eighty-four (84) months or
less; (ii) the amount financed is between $5,001.00 and
$7,000.00 and the term of which is 60 months or less; or (iii)
the amount financed is $5,000.00 or less and the term of which
is forty-eight (48) months or less.
(g) The third subparagraph of Section 9.1 is hereby amended in its
entirety to read as follows:
9.1 After the expiration of the commitment period, which shall
expire two years from the execution and delivery to Tammac by
the Developer of this Third Amendment to the Financing
Agreement, or the purchase by Tammac of an additional
$10,000,000.00 of Contracts, whichever occurs first, Developer
shall not have the option of offering Replacement Contracts to
Tammac for delinquent Contracts and Tammac shall be under no
obligation to accept any Replacement Contracts. From and after
the expiration of the commitment period, Developer must
repurchase the delinquent Contracts.
Reaffirmation of Loan Documents: The Developer and Guarantor, each,
jointly and severally, ratify and confirm that: (i) the Commitment Letter, as
amended; (ii) the Financing Agreement, as amended; (iii) the Deed of Trust, as
modified; (iv) the Security Agreement and all related documents executed
contemporaneously therewith or herewith, and any and all other documents
executed in connection therewith and herewith, are ratified and confirmed and
shall remain in full force and effect in accordance with their terms to the
extent not amended or modified herein or contemporaneously herewith. Developer
and Guarantor each, jointly and severally, warrant and represent that all
representations, warranties and covenants contained in the Loan Documents are
true and complete as of the date hereof, no warranty therein contained has been
breached as of the date hereof, and Developer and Guarantor are each in full
compliance with all of the terms thereof and have performed all obligations on
their part to be performed therein.
The Developer and Guarantor each, jointly and severally, acknowledge
their respective obligations under each of the Loan Documents and hereby
restate, in their entirety, the representations, warranties and covenants set
forth herein and in the aforesaid Loan Documents, as amended, which
representations, warranties and covenants are true and complete as of the date
of the execution of this Third Amendment to the Financing Agreement.
Guarantor consents to any extension, modification or change in any of
the aforesaid Loan Documents and related documents by Tammac and waives all
notice of any such change in the terms of collateral and further waives any
right or remedy that Tammac may have or may be required to pursue against
Developer or any other party liable thereunder or hereunder prior to commencing
any action or enforcing the provisions herein or therein contained or as
contained in the Guaranty Agreement.
No Marshalling: Tammac shall be under no obligation whatsoever to
proceed against any collateral securing the obligations of the Developer or the
Guarantor pursuant to the Loan Documents and/or to first proceed against any
person or entity obligated under the Loan Documents before proceeding against
any particular collateral available to Tammac or before proceeding against any
person or entity obligated under the Loan Documents.
Continuing Validity of Loan Documents: Except as expressly modified
herein, the Financing Agreement, the First Modification Agreement, the Second
Modification Agreement and all other Loan Documents shall remain in full force
and effect.
Inconsistent Rights or Remedies available to Tammac: In the event that
any of the Loan Documents contain any inconsistent rights or remedies otherwise
available to Tammac, the rights and/or remedies accorded to Tammac giving Tammac
the greatest protection and/or affording Tammac the greater rights and/or
remedies shall control.
Binding Effect: This Agreement shall be binding upon, enure to the
benefit of the parties hereto and their respective successors and assigned.
IN WITNESS WHEREOF, the undersigned hereunder have set their hands or
caused these presents to be executed by their proper corporate officers as of
the day and year first above written.
ATTEST: LOS ABRIGADOS PARTNERS LIMITED
PARTNERSHIP, an Arizona Limited
Partnership,
By: ILE SEDONA INCORPORATED, an
Arizona Corporation, Sole
General Partner
Nancy J. Stone By: Joseph P. Martori, President
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NANCY J. STONE, Secretary JOSEPH P. MARTORI, President
ATTEST: ILX INCORPORATED, f/k/a
INTERNATIONAL LEISURE ENTERPRISES,
INCORPORATED, an Arizona
Corporation
Stephanie D. Castronova By: Joseph P. Martori, President
------------------------- ------------------------------
STEPHANIE D. CASTRONOVA, JOSEPH P. MARTORI, President
Secretary and Chief Executive Officer
ATTEST/WITNESS: TAMMAC FINANCIAL CORP.
Joseph J. Lombardi By: Andy G. Roosa
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JOSEPH J. LOMBARDI, ASST. SEC. ANDY G. ROOSA, President